Page 4 - FSUOGM Week 15 2021

FSUOGM COMMENTARY FSUOGM

Russia seeks to expand

Uzbek influence with $1.5bn

in gas project loans

Russia dominates Uzbekistan's energy sector, although it faces some
competition for the role from China

UZBEKISTAN RUSSIAN lenders could arrange as much as memorandum with Uzbekistan’s energy minis-
$1.5bn in loans for a pair of gas projects in try last year on building a 1,500-MW power plant
WHAT: Uzbekistan, as Moscow looks to consolidate its to run on the gas, and they previously suggested
Russian lenders are dominant position in the Central Asian coun- that by-product natural gas liquids (NGLs)
considering arranging up try’s energy sector. could be used to manufacture petrochemicals.
to $1.5bn in financing for Russia’s VEB.RF announced last week that M25’s development is part of a broader push
a pair of gas projects in together with another Russian state lender Gaz- by the regime of Uzbek President Shavkat Mir-
Uzbekistan. prombank, it had agreed indicative financing ziyoyev to increase gas supply, to underpin an
terms to provide funding for the Years of Inde- expansion in Uzbekistan’s power generation and
WHY: pendence (M25) gas project in Uzbekistan’s petrochemicals sectors. Mirziyoyev took power
The funds would go to a southern Surkhandarya region. The overall cost in late 2016 and his government subsequently
gas field development of development is assessed at $1.75bn, of which announced lofty growth targets for domestic
involving Gazprom and Russian institutions are expected to supply gas production. But even before the coronavirus
the modernisation of $900mn. These funds will help pay for the pur- (COVID-19) pandemic hit, output was falling
Uzbekistan's pipeline chase of Russian services and equipment. far short of those targets.
network. Russia’s Gazprom and Uzbekistan’s A serious problem in Uzbekistan’s gas indus-
Uzbekneftegaz are leading a consortium to try is the poor state of its Soviet-era pipeline sys-
WHAT NEXT: develop M25, believed to be the country’s larg- tem. VEB.RF also teamed up with Gazprombank
Russia is the dominant est undeveloped gas field with over 150bn cubic and the Russian Agency for Export Creditor and
player in Uzbekistan's metres of proven and probable reserves, accord- Investment Insurance (EXIAR) to support the
energy sector, and could ing to an independent audit. The group, which grid’s modernisation. The parties “will consider
have an opportunity to also includes Cyprus-registered Altmax, part- the possibility” for organising a syndicated loan
consolidate its position in owned by Russian billionaire Andrey Filatov, is of up to $618mn for pipeline operator Uztrans-
the country's upcoming looking to build a 5 bcm per year gas process- gaz to pay for the upgrades. At least half of the
privatisation programme. ing complex at the site. The investors signed a funding, which is expected to be sourced from

P4 www. NEWSBASE .com Week 15 14•April•2021